257 – Stakeholders? On tap, not on top!

“Multi-stakeholderism” – addressing issues and solving problems in international relations within a coalition of willing participants – has been touted as institutional solution to many of the world’s problems. The latest instance is Internet Governance (IG), where the existing motley crowd of technical experts, involved businesses, private technical organizations like ICANN, volunteers and hangers-on, which has more or less run the IG show since the heady beginning “inflationary phase” of Internet development, are trying to keep governments out. Alternatively, they are asking states to join them at the table as “stake-holders” among others – that is as companions in an unstructured arrangement striving somehow for consensus on the many issues. The model is touted as “bottom-up,” or as “self-help” – and favorably contrasted with the heavy, slow and inefficient “inter-governmental” approach in international relations.

Is multi-stakeholderism is touted truly “democratic” and “efficient?” Many have bought into it, and are vociferously spreading the mantra. I have my doubts. I smell self-serving deals.

Is multi-stakeholderism democratic?

Fundamentally, democracy is inclusive: its legitimacy derives from the explicit or tacit consent of the governed. When personal involvement of the governed is not possible, democracy organizes representation – various forms of elections are held, yielding everyone a fair chance to elect one’s representative. Thus elected, representatives are legitimated to act on behalf of their constituency. Methods of legitimation many vary, but in the end legitimacy is established. As a corollary, mandates are subject to recall, creating procedures for withholding legitimacy (Karl POPPER famously said: “democracy was all about throwing the rascals out.”). In multi-stakeholderism legitimacy is the result of voluntaristic involvement based on self-assertion of having a “stake,” an interest, rather than legitimating consent. Fair enough, multi-stakeholderism declares itself “open” to anyone and coming claiming an interest, or is willing to contribute. This is all and is far from enough. To make matters worse, withholding legitimacy is not an option, and this, in the long run, may be the most worrisome feature of multi-stakeholderism: it is akin to squatting public space. Once established, multi-stakeholderism is difficult to either reform or dislodge.[1]

In the republican form of democracy, society recognizes legitimate interests and awards them a separate voice. Representation, on the other hand, is seldom linked to strength of interest – otherwise the rich would have the most voting power. Weighing of voting rights and length of mandate is two popular ways of ex ante acknowledging while reining in, such interests. Multi-stakeholderism has no way of restraining partisan interests. In fact, restraint is predicted on their triangulation of opposite interests. This may lead to jaw-boning, collusion, or stalemate.

Moving from inchoate and self-organizing democracy to a state structure, implies setting “rules of the game” once and for all, rather than in the heat of debate. The constitution is first and foremost a way to organize an impartial decision process in ways that preserve the democratic intent of full participation, e.g. through an independent judiciary arm, tasked with overseeing the application of these rules and interpreting them as needed. Multi-stakeholderism has no explicit rules – just consensus, precedent, or tradition. This allows for fashions and ambiguities, and ad-hoc compromises (usually) favoring the strong, or the gifted.

Verification of compliance underpins every decision-making process. In a republican structure, the state is given a monopoly of force to secure the result. For lack of powers, multi-stakeholderism tends to ignore compliance issues, or relies on moral suasion. Rather, it relies on good intentions. As a corollary, evidence for success of decisions is lacking.

Democracy is inclusive, not just of people, but of issues. Democracy recognizes the interconnectedness of all political issues. As an example, economic efficiency and economic justice may at time require trade-offs. One of the major tasks of democratic processes is finding politically viable trade-offs between issues. Multi-stakeholderism is sectorial by definition, for it is the action space of those having an immediate “stake.” It either ignores or phagocytizes trade-offs between issues (mostly as cover for sectorial interests). In the case of Internet, “freedom of information” is a political issue of the highest order. I see no material justification, let alone legitimacy, accruing to self-declared interests in deciding this issue for us all.

Is multi-stakeholderism efficient?

Efficiency, nowadays, is the name of the game. Efficiency is one of the unacknowledged heuristics; I define the term as substitution of a difficult question by a related one, which is easier to answer.[2] The difficult political issue is to distribute economic means fairly. Despairing of ever agreeing on what is “fair”, we retreat toward the lesser and easier aim of “efficiency” – eliminating waste. Efficiency is necessary, but in itself it is not sufficient to obtain fairness. One should not overestimate “efficiency”. The hidden price may well be unfairness, as when corporations are given free rein to cater to those who can afford to pay for, rather than need the service.

Economic theory indicates that “efficiency” critically rests on the transparency of information. Only if all sides have a full picture of the situation, will they act in their best interests. Efficiency drops precipitously with emerging asymmetries of information. Trickster used-car salesmen know that.[3]

In international relations asymmetries of information abound. Neutral structures – secretariats of international organizations – have been created to raise the overall level of information while structuring it. The aim is to assist in leveling the playing field. Multi-stakeholderism relies on the clash of interests and eschews such equalizing assistance.

“Efficiency”, finally, is a micro-level, hence subordinate goal. It applies after the strategic choices have been made. In weighing possible ways forward, on the other hand, benefit-cost analysis is central. Equal efficiency of all options is assumed. Here, the search for “efficiency” is meaningless.

A personal aside. The price to pay for “consensus” is the length of the deliberations. This is fine, if time is not an issue, or if rules for closure have been agreed upon beforehand. The current fashion for seeking “truth” and eschewing closure based on available knowledge is a harbinger of endless debates – while private interests put their boots on the ground.

Provided – and here is an essential element – that equal chances attach to all options. The power of fact, however, is overwhelming. If one solution has already been implemented already, corrections, or changes, are difficult. When one compares “what is” with “what might be”, the latter loses invariably. Path-dependent outcomes are most difficult to change. Private interests have a paramount interest in having their favorite option occupy the ground before alternatives have a chance to develop. Multi-stakeholderism is a preferred way of achieving this goal. This is particularly the case with Internet, where the “natural monopoly” character of the service favors the first to innovate – see Microsoft and Google.

Multi-staholderism in historical perspective

The foregoing discussion has an abstract character. One should consider also the historical perspective, so as better to understand multi-stakeholderism not as an alternative as much as a phase in the development of international institutions.

When faced with a complex environment, a living or social system will generate structures so as best to exploit it.[4] In the beginning, the structures are simple, becoming more complex over time. The first organisms to come on land were simple, now we have trees. The interaction has created ecosystems through niche-construction. Assemblages of cells develop into bodies. The price for organization is “loss of potency”. A fertilized egg can be anything: it is “omni-potent.” As cells multiply, the cell specialize into different tissues: they are now “oligo-potent.” As choices follow each other, loose coalitions yield to structures. It is the price of niche-construction. Here stromatolites[5] – an assemblage of separate biological entities surviving for 3.5 billion years (and gone nowhere).

Eukaryotic cells that have lost some of their omni-potence and specialized have developed into multi-cellular organisms. This development rests on subsidiary: while predispositions come from the core, local conditions decide on the actual development. Such systems are homeostatic: the regulated themselves by following simple rules.

As usual in nature, there are in between forms. Mitochondria, the power plants of body cells, have retained most of their own DNA, while shifting some of it to the nucleus in order to secure integration. Multi-stakeholderism is possible within a structure, but not without one – it soon degenerates into cancer. Alternatively, dramatic losses of diversity may ensue. The worldwide advance of jellyfish blooms is an indicator of failing structures.[6]

Multi-stakeholderism is an early phase in structure-building. “Collectives” yield to more organized structures. We observe this in past as well as current societies. Bare democracy – the town-hall meeting – evolves into republicanism as the collective transforms into the state.[7] Organized does not mean centralized. The state creates possibilities for markets, without running them. The human body is organized without being a top-down structure. The current fashion for multi-stakeholderism smells of nostalgia for the time before binding – that is irreversible – decisions are yet to be made. It is nostalgia for the “political womb” before commitments. It harks back to the eutopia of personal autonomy separate and in opposition to society as if such an opposition could exist. It is the current Zeitgeist. Meanwhile, private interests thrive in the absence of structures – that is why they vociferously demand “freedom of action.”

Internet is vital to the society. I find the claim that IG may be organized without an overarching legitimacy perplexing. Bringing legitimacy to international relations is “work in progress:” we are experimenting with various models within a framework of legitimacy, but with a greater and lesser degree of coordination. Legitimacy, however, remains the core issue. As they say: multiple stakeholders should be on tap, not on top!

[1] Labels for institutions change over time, hiding unchanging realities behind new veils. Guilds, confraternities, and other voluntaristic structures have shown themselves to “close” over time. They have also been very difficult to dislodge. This also applies to the enlargement of political franchises.

[3] George AKERLOF, Michael SPENCE, and Joseph STIGLITZ jointly received the Nobel Memorial Prize in Economic Sciences in 2001 for their research related to asymmetric information. AKERLOF’s paper uses the market for used cars as an example of the problem of quality uncertainty. It concludes that owners of good cars will not place their cars on the used car market. This is sometimes summarized as “the bad driving out the good” in the market. http://en.wikipedia.org/wiki/The_Market_for_Lemons

[4] See e.g.: Adrian BEJAN – J. Peder ZANE (2012): Design in nature. How the condtructal law governs evolution in biology, physics, technology, and social organization. Doubleday, New York.